Commentary: Hard to break farmer subsidies

Rice farmers in Thailand are asking the military government to come up with a new market intervention scheme to stem the decline in prices of rice being paid farmers that are now back to being based on the international rice trading prices.

The prime minister, who was ousted and which ultimately led to the military coup in the country, came into power by winning a landslide vote in the rural countryside of a country known as the premier rice producer of the world. She won by promising more subsidies to the rice farmers than the previous party in power promised.

It doesn’t matter where in the world it occurs—from the U.S. to Europe to any Third World country—but once farmers are given price supports in one way or another then it becomes extremely hard for subsidies to be removed. Politicians looking for votes don’t want to upset constituencies with changes that could negatively impact farmers’ income or food supply. It usually takes some big, novel ideas to provide an income safety net.

The military in charge in Thailand at the moment isn’t looking for votes; therefore, they are in a position to make hard decisions based on economics. Almost all aspects of a military dictatorship aren’t good—especially the crackdown on freedom of speech and lack of democracy.

But what also isn’t good is that politicians worldwide successfully win elections by promising the illogical and economically unfeasible—a form of buying votes—as the prime minister did.

The price-support scheme of former Prime Minister Yingluck Shinawatra ended in February after causing billions of dollars in losses to the government and leading to an estimated 90 billion baht ($3.5 billion) in unpaid money to farmers who sold their rice to the government.

The Thai military, which seized power in May after months of political turmoil, is moving to pay the arrears. A senior finance ministry official said the ministry has secured a loan for 50 billion baht to pay farmers, according to a Reuters report.

But farmers want additional income guarantees. "We still need the government's price supporting scheme. It may not be the same as Yingluck's scheme, but it could be a new measure to help farmers when prices are falling," Prasit Boonchoey, head of the Thai Rice Farmers Association, told Reuters.

The poor Thai rice farmers deserve their income to be above complete poverty, but something has to be worked out that won’t bankrupt the government?